SEMPERGRAMS
July 30, 2019
Gas Tariffs Affecting Glove Pricing
A gas tariff that went into effect July 15, 2019 has added unanticipated production costs for glove manufacturing companies in Malaysia. Due to the changes in production costs, disposable glove prices will increase.
Volatile global markets have widespread implications for manufacturing organizations. Rising energy costs and unexpected fluctuations in raw material price levels have direct effects on the global disposable glove market in the form of increased prices for the end user.
The Malaysian Rubber Glove Manufacturers Association (MARGMA) estimates their production costs would increase anywhere from 30 US cents to 80 US cents per 1,000 pieces of nitrile gloves and 35 US cents to 85 US cents for latex gloves.
Factories are forced to adjust prices due to the newly imposed tariff. These price increases will affect the entire global glove market. According to analysts, natural gas constitutes approximately 10-12% of a glove manufacturer’s production costs.1
Gas Malaysia has announced, “The government has prescribed the Incentive-Based Regulation (IBR) framework which sets the Base Tariff for a regulatory period of three years from January 2017 and allows changes in the gas costs to be passed through via the Gas Cost Pass Through (GCPT) mechanism every six months.”
Gas tariff price increases are common. Also, beginning January 1, 2020, Malaysian glove manufacturers will have another huge problem on their hands – gas deregulation. Gas prices are expected to rise tremendously during this time.
All that said, be assured that Sempermed is monitoring the situation closely and will communicate further details as they become available.
Volatile global markets have widespread implications for manufacturing organizations. Rising energy costs and unexpected fluctuations in raw material price levels have direct effects on the global disposable glove market in the form of increased prices for the end user.
The Malaysian Rubber Glove Manufacturers Association (MARGMA) estimates their production costs would increase anywhere from 30 US cents to 80 US cents per 1,000 pieces of nitrile gloves and 35 US cents to 85 US cents for latex gloves.
Factories are forced to adjust prices due to the newly imposed tariff. These price increases will affect the entire global glove market. According to analysts, natural gas constitutes approximately 10-12% of a glove manufacturer’s production costs.1
Gas Malaysia has announced, “The government has prescribed the Incentive-Based Regulation (IBR) framework which sets the Base Tariff for a regulatory period of three years from January 2017 and allows changes in the gas costs to be passed through via the Gas Cost Pass Through (GCPT) mechanism every six months.”
Gas tariff price increases are common. Also, beginning January 1, 2020, Malaysian glove manufacturers will have another huge problem on their hands – gas deregulation. Gas prices are expected to rise tremendously during this time.
All that said, be assured that Sempermed is monitoring the situation closely and will communicate further details as they become available.
